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Lawsuits in California for Misclassification of an Employee as an Independent Contractor

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According to California law, workers who should be considered W2 employees but are misclassified as 1099 independent contractors are eligible to file wage and hour claims. Damages that an employer may be subject to include:

  • Lost wages
  • Overtime pay
  • Unpaid meals and breaks
  • Interest and penalties.

In Southern California, an independent contractor is an employee who performs services for an employer while controlling how the services are rendered. For the purposes of California labor law, someone providing services to another party who does not fulfill the legal criteria of an independent contractor is considered an employee.

It’s essential to categorize employees in the right group since independent contractors aren’t protected by California’s wage and hour laws. These laws cover the minimum wage and meal and rest breaks. 

However, employers can’t get around California’s wage and hour laws by telling an employee they’re an independent contractor or making them sign a document saying so.

Unless the person hired fits an independent contractor’s meaning, that person is an employee and has all the provisions that California employment law gives workers.

The Difference Between An Employee And An Independent Contractor In California

According to California labor law, an independent contractor provides services to another party if the conditions below are met:

  • The person providing the services is guaranteed a specified sum of money in exchange for a particular outcome, and they are still in charge of how the assignment was done.
  • An employee-employer connection has been established if the individual seeking the services influences how the work is executed rather than merely specifying the intended outcome.

Independent contractors are workers who get a set amount of money to do a certain job and keep control over the process. Independent contractors are also responsible for paying their own Social Security and Medicare taxes to the IRS.

California implemented the so-called ABC test to determine if someone is a worker. The ABC test presumes that every worker is an employee. An employer could be considered an independent contractor, though, if the employer can show:

  • The worker does work outside the ordinary course of the hiring entity’s business.
  • The employer is engaged in an independent business, occupation, or trade similar to that involved in the roles executed.
  • The worker is free from the employer’s business control regarding work performance.

The ABC test has replaced the “Borello” criterion in California. The “Borello” criterion was a multifactor test used to decide if a person was a contractor or an employee.

Large gig economy companies like Lyft and Uber say their workers still qualify as independent contractors under the new ABC test and don’t deserve unemployment insurance and health care benefits. It is uncertain if the judge will concur.

It should be noted that the Borello criteria, which are older, will still be utilized to assess whether a professional is an independent contractor. Some licensed doctors, engineers, lawyers, private detectives, accountants, and marketing and HR specialists work in these fields. Some licensed manicurists and barbers who meet specific requirements, like being able to set their prices, are also on the list. 

Independent authors and photographers

According to Assembly Bill 5 in California, independent writers, editors, and photographers are limited to 35 “content submissions” each year to media organizations.

What to Do if Misclassified

California law gives you the tools to assert your rights if you feel someone who has hired you to provide services has misclassified you as an independent contractor. The initial step to take is to Hire a Southern California employment lawyer. Penalties for misclassification in California may be severe.

You are entitled to overtime compensation and meal/rest breaks if you work as an employee and are not a California-exempt employee. Additionally, you cannot be coerced or forced by your employer to work overtime.

This means that California employees who are wrongfully misclassified as independent contractors could file wage and hour lawsuits against their employers to recover overtime pay that was wrongfully withheld from them, interest on the unpaid overtime, and perhaps even legal costs.

Possible Damages Available After Filing A Claim

The types of wage and hour law violations that may result in compensation in California wage and hour cases include:

  • Overtime law violations
  • Violations of the minimum wage law
  • Rest or meal break law violations.
  • Purposefully misclassifying workers as independent contractors.

A worker must be intentionally misclassified as an independent contractor to avoid being considered an employee for purposes of California law.

An individual who willfully misclassifies a worker as an independent contractor is subject to a punishment of $5,000 to $25,000 for each infraction. If an employer is assessed this fine, they are also barred from levying fees or taking money out of this pay. 

The employee is entitled to recovery for the unpaid amounts owed, interest, and attorneys’ costs if the employer refuses to pay the minimum wage or overtime due to the worker’s incorrect classification as an independent contractor.

Work with a competent employment attorney if you are uncertain that you have misclassified your workers unknowingly. If you willingly misclassify your employees, they could file charges against you, and you could face severe penalties. You will still need legal counsel.

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